Gold and Oil Markets Report – 14 Jan 2013

The European Central Bank (ECB) and Bank of England (BOE) both held the benchmark rates unchanged last week. On Thursday, ECB President Draghi expressed confidence in recovery in euro economy this year once the bond markets stabilize. Japan’s Finance Minister Taro Aso also plans to buy more bonds issued by European Stability Mechanism to maintain yen weakness. USDX has been receding further and pushing up most commodity prices.

Crude Oil

WTI Crude prices have been struggling to stand above 92.50 supports amid increasing supplies. The U.S. crude inventories rose 1.3 million barrels above forecast in the week ended 5 January. This week, we forecast the market may rise to 96.50 targets should USDX weaken further from rising euro currency. The aforementioned support will be resilient unless breaking beyond it will reverse the trend back to 91.50 levels.

Gold

Gold prices have been consolidating without new trend movement last week. The market moved from 1640.00 tp 1680.00 ranges while affected by the euro and USDX sentiments. This week, we reckon the market may break into new trend while we observe the 2 extremes at 1650.00 and 1675.00 levels. No clue yet for the imminent trend but the confirmation of the violation will probably extend another USD30.00 range beyond.

Silver

Silver prices are currently guarded with strong resistance at 30.940 levels with immediate resistacne lying at 30.700 regions. This week, we expect the trend to be down after mid-week if the aforementioned resistance cannot be pierced through. Initial support is expected to rise at 30.000 areas but violating beneath will probably re-search the bottoms at 29.200 regions.

Crude Palm Oil

Crude Palm Oil Futures (FCPO) on Bursa Derivatives dropped again last week due to weak dollar receding against Ringgit and Asian currencies. The March delivery contract settled at 2366 for the weekend with bearish sentiment. This week, we reckon the trend may drive lower to test 2280 – 2300 supports while the global currency trends may continue to affect FCPO sentiment. Topside resistance lies at 2430 – 2450 regions with selling interests.

Wong is founder and principal consultant of PWForex.com and holds a professional qualification in NASD series 3 and 5 approved by National Futures Association (USA). He was previously attached with Bankers Trust Futures Inc, Barclays ZW Futures and Smith Barney Shearson (Citigroup) Inc.

He is also an active trader and author of 8 Ways to Invest In China’s Emerging Markets. Wong is also columnist for The Star, The Borneo Post in East Malaysia, The Busy Weekly, The Trader’s Journal, The Forex Journal, The Pulses, The Analysts and Capital Asia magazine.

He is a regular speaker on trading topics as well as Master Speaker for the annual Asia Traders and Investors Convention (ATIC).

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